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Wharton real estate professor, Mariaflavia Harari, recently published a paper that looks at the relationship between urban geometry (specifically compactness) and inner city commuting efficiency across 450 cities in India.

Consistent with previous research done in this space, she finds that people generally prefer compact cities and that they are willing to pay a premium for it. It increases overall welfare. Here’s an excerpt from her paper:

“My findings are broadly consistent with compact city shape being a consumption amenity. All else being equal, more compact cities grow faster. There is also evidence that consumers are paying a premium for living in more compact cities, in terms of lower wages and, possibly, higher housing rents.”

So her recommendations for the Indian cities she analyzed was that they should relax land use restrictions to allow for more vertical / compact development and that they should focus on improving urban transport in order to offset some of the negatives externalities associated with sprawl. This is no different than the approach that many cities in the developing world are adopting or looking to adopt.

One of things that really stood out for me in her paper though is the way people perceive commuting:

“The loss associated with non-compact shape appears to be substantial: a one-standard deviation deterioration in city shape, corresponding to a 720 meter increase in the average within-city round-trip, entails a welfare loss equivalent to a 5% decrease in income. This is considerably larger than the direct monetary and opportunity cost associated to lengthier commutes. Less compact cities also appear to attract fewer low-income immigrants, as captured by the share of slum dwellers.”

What this is saying is that we tend to overvalue the negatives of commuting, beyond the direct costs of gas, insurance, car payments, our time, and so on. We hate it so much that we also want to be compensated for the mental anguish. Here is that same idea said differently:

The estimated welfare loss from longer commutes appears to be large, relative to the immediate time and monetary costs of commuting. This is consistent with the interpretation that commuting is perceived as a particularly burdensome activity. The behavioral literature has come to similar conclusions, albeit in the context of developed countries. Stutzer and Frey (2008) find a large and robust negative relation between commuting time and subjective wellbeing, using German data. They estimate that individuals commuting 23 minutes one way would have to earn 19 percent more per month, on average, in order to be fully compensated.

So I guess I’m not the only one who thinks commuting and driving sucks.

City Observatory recently republished their commentary on a report (released earlier this year) called Who Pays for Roads. I missed their original post, so this is new to me.

The report and commentary are all about the mispricing of roads/driving and the fallacy that “user fees” (gas taxes, tolls, and so on) are enough to completely cover the costs associated with driving.

I have been a vocal supporter of road pricing and/or congestion charges here in Toronto, and so I’d like to share two pieces from their commentary.

The first is this paragraph, which talks about how mispricing leads to demand issues (i.e. traffic congestion):  

The conventional wisdom of road finance is that we have a shortfall of revenue: we “need” more money to pay for maintenance and repair and for new construction. But the huge subsidy to car use has another equally important implication: because user fees are set too low, and because, in essence, we are paying people to drive more, we have excess demand for the road system. If we priced the use of our roads to recover even the cost of maintenance, driving would be noticeably more expensive, and people would have much stronger incentives to drive less, and to use other forms of transportation, like transit and cycling. The fact that user fees are too low not only means that there isn’t enough revenue, but that there is too much demand. One value of user fees would be that they would discourage excessive use of the roads, lessen wear and tear, and in many cases obviate the need for costly new capacity.

And the second is this chart, which shows the cumulative net subsidy to highways in the US from the late 1940’s:

https://500px.com/embed.js

Wharton real estate professor, Mariaflavia Harari, recently published a paper that looks at the relationship between urban geometry (specifically compactness) and inner city commuting efficiency across 450 cities in India.

Consistent with previous research done in this space, she finds that people generally prefer compact cities and that they are willing to pay a premium for it. It increases overall welfare. Here’s an excerpt from her paper:

“My findings are broadly consistent with compact city shape being a consumption amenity. All else being equal, more compact cities grow faster. There is also evidence that consumers are paying a premium for living in more compact cities, in terms of lower wages and, possibly, higher housing rents.”

So her recommendations for the Indian cities she analyzed was that they should relax land use restrictions to allow for more vertical / compact development and that they should focus on improving urban transport in order to offset some of the negatives externalities associated with sprawl. This is no different than the approach that many cities in the developing world are adopting or looking to adopt.

One of things that really stood out for me in her paper though is the way people perceive commuting:

“The loss associated with non-compact shape appears to be substantial: a one-standard deviation deterioration in city shape, corresponding to a 720 meter increase in the average within-city round-trip, entails a welfare loss equivalent to a 5% decrease in income. This is considerably larger than the direct monetary and opportunity cost associated to lengthier commutes. Less compact cities also appear to attract fewer low-income immigrants, as captured by the share of slum dwellers.”

What this is saying is that we tend to overvalue the negatives of commuting, beyond the direct costs of gas, insurance, car payments, our time, and so on. We hate it so much that we also want to be compensated for the mental anguish. Here is that same idea said differently:

The estimated welfare loss from longer commutes appears to be large, relative to the immediate time and monetary costs of commuting. This is consistent with the interpretation that commuting is perceived as a particularly burdensome activity. The behavioral literature has come to similar conclusions, albeit in the context of developed countries. Stutzer and Frey (2008) find a large and robust negative relation between commuting time and subjective wellbeing, using German data. They estimate that individuals commuting 23 minutes one way would have to earn 19 percent more per month, on average, in order to be fully compensated.

So I guess I’m not the only one who thinks commuting and driving sucks.

City Observatory recently republished their commentary on a report (released earlier this year) called Who Pays for Roads. I missed their original post, so this is new to me.

The report and commentary are all about the mispricing of roads/driving and the fallacy that “user fees” (gas taxes, tolls, and so on) are enough to completely cover the costs associated with driving.

I have been a vocal supporter of road pricing and/or congestion charges here in Toronto, and so I’d like to share two pieces from their commentary.

The first is this paragraph, which talks about how mispricing leads to demand issues (i.e. traffic congestion):  

The conventional wisdom of road finance is that we have a shortfall of revenue: we “need” more money to pay for maintenance and repair and for new construction. But the huge subsidy to car use has another equally important implication: because user fees are set too low, and because, in essence, we are paying people to drive more, we have excess demand for the road system. If we priced the use of our roads to recover even the cost of maintenance, driving would be noticeably more expensive, and people would have much stronger incentives to drive less, and to use other forms of transportation, like transit and cycling. The fact that user fees are too low not only means that there isn’t enough revenue, but that there is too much demand. One value of user fees would be that they would discourage excessive use of the roads, lessen wear and tear, and in many cases obviate the need for costly new capacity.

And the second is this chart, which shows the cumulative net subsidy to highways in the US from the late 1940’s: